Will shareholders give the green light for the merger of KT and KTF The last hurdle remains in the courts of KT, a leading broadband provider, and KTF, the second largest mobile carrier subsidiary to KT in the Korean market. The two are now catching their breaths as they finally received approvals from both the Korean Communications Commission (KCC) and the Fair Trade Commission (FTC). If the majority of the shareholders from the two say yes, KT Group will be reborn as an almighty giant with assets totaling of 23.6 trillion won (US$16.9 billion) and annual revenue of 19 trillion won.

The word almighty does not merely mean the size of assets and the revenue, but also huge number of subscribers. As a matter of fact, the merged KT lines will hold about 20 million subscribers of telephones; 15 million of mobile; 6.7 million of broadband; and 1.2 million of WiBro, Internet phones and IPTV. The sizes of all the indexes are provocative enough to scare market players even though the merged KT has yet to be seen.

Experts say that the merger will create a new environment for the information and communication industry in Korea. They share a common opinion that the merger will stimulate players to look for new partners for other possible mergers so that they can compete with the giant. SK Telecom, a mobile service provider, and its affiliate SK Broadband will try to find ance of the giant. Experts agree that the stimulation caused by the merger will awaken the ICT industry that has long been in a standstill amid a lack of challenges in a recession.

The merger will give birth to new services bundled with different kinds of services and called convergence. It is obvious that the new KT will bundle its existing services with KTF's so that customers can enjoy more services with less cost. The combined two will find room to lower the price by cutting off the overlapping marketing cost and organization. This will stimulate competitors to follow the same direction in favor of customers.

In fact, the KCC and FTC were deeply concerned with the effect that the merger would bring forth in terms of the benefits to the market and customers. KCC said the merger was approved because it was deemed that the negatives of market competition will not hamper the growth of the telecommunication industry. The FTC gave the green light to the merger with a similar reason. Unlike the unanimous approvals, rivals in the telecommunication market claimed that the deal would badly affect the possibility of sound competition among players because KT could sweep the market with its lowered prices. But the appeals from the two major rivals, SK Telecom and LG Telecom, were denied. The FTC assured them that the merger would not impair competition.

In spite of the favorable atmosphere, KT and KTF must meet three stipulations which the KCC put on the deal. Any violation of the conditions can lead to the KCC revoking its decision. KT is required to submit roadmaps to make it easier for other players to obtain access to KT's essential facilities within 90 days of the hand over of written approval. KT should also deliver the blueprints to make number transfers between conventional fixed line telephone services and Internet Protocol telephone services within 60 days. The last is that KT is obligated to finalize its total plans concerning wireless services so that rivals can see and get ready for KT's new policies. All three are minimum protections for other players who are very worried about the gigantic KT Group even though the KCC will monitor adherence to the plans for three years following the merger.

Now the ball is in the shareholders' court. KT, which cleared all the administrative requirements, needs to be approved by shareholders of both KT and KTF by March 27. KT is confident that the shareholders will pass the merger because a majority of them think that the merger will add value to their shares.

Now KT faces the most important question, which is whether or not the merger can lower customer telecommunications costs. KT is considering package deals and bundled services so that it can make room for price cutting. KT suggested that the discount would reach 30 percent at the most. KT had already announced that it would give lowered prices to bundled services such as broadband wireless Internet with KTF's 3G mobile services. An official of KT said that the merger will be a win-win for both customers and shareholders. Experts emphasize that the merged KT is a sign that a new world surrounding information and communication has already started in Korea.